How to avoid foreclosure and protect your estate rights

Are you planning to pack your bags and leave due to a delay in your mortgage payments? At this point, any wrong move you make puts your home in danger of foreclosure. Hence, you need to take the following steps to avoid foreclosure and protect your home.

  1. Find a forbearance agreement

Ask the bank to grant you forbearance. The bank will only give it to you if it checks that the reasons for your non-payment are valid. These reasons may include sudden illness or an unexpected drop in salary. Forbearance will reduce your payable amount or suspend your payment for a period of time. It is necessary to discuss with your lender to agree on these conditions. Assure your lender that you will only stick to the new payment plan to cement this deal.

Once the period granted to you has elapsed, your lender could make the following arrangements. One option is that you continue to pay the original amount with an additional amount to cover missed payments. Second, you can pay off the missed payments all at once through a repayment plan. Alternatively, your lender may agree that you defer the outstanding amount until the end of the loan.

  1. Ask for help

It could be a very demanding time for you if most of the options you try don’t pay off. Ask for help because you will need it to make important decisions to avoid a foreclosure. You can consider getting help from organizations. People at of these organizations will help you find a foreclosure defense from qualified attorneys. Additionally, once you are alerted to a foreclosure lawsuit, the organization will advise you on what action to take.

  1. Opt for mortgage modification

Modifying your mortgage will give you the chance to refinance it or extend its term. There is a lot of mortgage modification options that you can adjust. Talk to your lender so they can allow you to make payments up to your income limit. To make this deal, you must convince your lender that your financial constraints are temporary and you will soon be back on your feet.

  1. Refinance

As a borrower, you have the right to refinance your mortgage by taking out a hard money loan. However, your lender may be reluctant to refinance your mortgage if they feel you are not worthy of credit. This may be difficult for you since you have a pending closure. If these two reasons prevent you from refinancing your loan, you may want to consider seeking help from a private lender. Unfortunately, private lenders have ridiculous interest rates, but if that’s your only way to avoid foreclosure, go for it.

  1. Short refinancing

Besides refinancing through the means mentioned above, you can also apply for short-term refinancing. This involves your lender agreeing to write off parts of your debt and refinance the rest into a new loan.

  1. Reinstate your mortgage

The reinstatement of a loan consists of paying it in a lump sum; pay the missed amounts plus interest, fees and expenses. If you have money on hand, you may consider reinstating your mortgage. Each country, according to the laws in force, leaves a certain time for the owners to relocate. Don’t rely solely on the state to give you a reinstatement timeframe, as some lenders include it when agreeing on the payment plan. Interestingly, most lenders would rather come up with a workable plan for you than lobby for your home to be foreclosed. Consult with your loan officer to determine how much time you have for recovery.

  1. Consider a repayment plan

You can only benefit from this option if you are not very behind on your mortgage payments. It allows you to make arrangements to catch up on late payments while staying up to date with outstanding amounts payable. Therefore, you must prove the financial capacity to cover the missed and outstanding payment. Your lender will give you a specific time frame to execute a repayment plan based on current circumstances.

  1. Should you file for bankruptcy?

Some people choose to file for bankruptcy to prevent foreclosure on their home. However, it is a very delicate step to take. Filing for bankruptcy does not completely protect your home from foreclosure; it just delays the process. If things go wrong and your bankruptcy stay is canceled, your lender is allowed to demand full payment. At this point, you can think about refinancing your loan. However, your state already declared bankrupt will not be suitable for creditors.

Use a Chapter 13 bankruptcy to delay foreclosure. Do not use a Chapter 7 bankruptcy unless you are currently on the loan payment. A Chapter 7 bankruptcy will give you quality time until your lender can get an automatic stay.

As stated earlier, this shouldn’t be your first step in dealing with a foreclosure. However, you may want to consider filing for bankruptcy if it eliminates your other unpaid debts. Take this step under the guidance of a bankruptcy lawyer to learn about its pros and cons.

In conclusion, if you want to avoid foreclosure, you need to steer clear of its causes. Make sure you don’t go into excessive debt, have enough emergency resolution resources, have a home you can afford, and have it insured.

About Janet Young

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